On top of new affordable mortgage programs being provided for home buyers this year, those mortgage insurance premiums attached to these FHA loans are going down as well!
Title II mortgages has made home owning available for many Americans that just don’t have big wads of cash upfront for a down payment, offering home loans for down payments as little as 3%. One of the ways this is made possible is by attaching Mortgage Insurance, lumped into your approved loan. While this does protect the banks investment, it can also cover any losses if you default on your loan.
In effect on January 26. 2015, the FHA is offering reduced rates on qualifying mortgages with terms equaling 15 years or greater. The FHA is also temporarily approving all cancellation requests on active case numbers within 30 days of this activation date. These lower rates are also available to you under refinancing as long as your current mortgage was approved after May 31, 2009.
If your current Mortgage Insurance Premium is 1.3% annually, or 130 bps (basis points), the new premiums the FHA is offering is .8% annually. For example, if on a $100,000 loan, your rate is 130 bps, you’d be paying $1,300 annually on your mortgage insurance, at the reduced rate, you’d only be paying $800 into it. That’s nearly half, saving you a not so skimpy $700!
Take advantage this year of all the reduced rates and options in home buying. These incentives are now being offered to improve even further an already recovering real estate market. Its time to buy!